Interesting though disturbing times in the stock markets around the world. Today the FTSE is down another 80 points as I write, following the global cycle of decline seen in the US and Asia in the last few trading days.
I've vaguely followed the hedge fund industry's growth and development over the last few years, but not really given it my full concentration, as it never seemed that relevant to me. Even less attention on the US sub-prime mortgage market, which to be honest I'd never heard about before it all went belly-up.
Hedge funds, or large betting accounts as you and I know them, seem to have been let down by their quant data modelling, which failed to deal with the major issue of the sub-prime crisis and resultant black holes in the finances of certain major institutions.
A lesson for us all I think, data is data, it's not the total solution, it needs a constant safety net of human interpretation, whether its a seriously complex piece of financial derivatives modelling, or a piece of quantitative market research.
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